• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Jim Cramer

Jim Cramer: For Investors, China Offers the School of Hard Knocks

We really don't know which kinds of companies China is going to target, but I see one pattern, and you should know it before you put down your cash.
By JIM CRAMER Aug 02, 2021 | 12:04 PM EDT
Stocks quotes in this article: DIDI, BABA, BIDU, PDD

It didn't take long. The Chinese stock apologists are out in full force.

They didn't want to wait to see the full fallout of from the trashing of Didi (DIDI) investors here. They simply say that Didi had been in trouble with the authorities already, so what's the big deal? The after-school stocks, the profits-turned-into-non-profits? An aberration these apologists say. Of course, the government had to crack down on these schools. They were filled with regular teachers, who, rather than help all students, chose to help the privileged few. So what did you expect from the government? Of course they had to make these companies non-profits, free to all.

Of course? Previously in trouble? No recourse but to hurt these companies?

Are you kidding me? These are shocking moves that would never be tolerated here. Nor would we ever accept the lack of disclosure that so many Chinese companies have that list here. I know the Securities and Exchange Commission wants to crackdown on this issue and the Chinese government wants to work closely with the SEC to rectify the situation.

The apologists don't want to wait. They have mentally cordoned off companies that could be in trouble -- ones that are too capitalistic and encourage making money while creating class divisions. They don't want the people to be dumbed down by social media. They don't want companies to work their employees too hard.

But, otherwise, it's all systems go. They want you in Alibaba (BABA) , which reports Tuesday morning. They love Baidu (BIDU) , the online search company like Google that reports on Aug. 12 and they are talking lay-up. They also think it is time to buy Pinduoduo (PDD) , an online technology platform for agriculture.

And, I say: Wait one second.

We really don't know which kinds of companies the government is going to target. I see one pattern: The Chinese government doesn't favor the rich and wants their influence diminished. Anyone in the billionaire class has the ability to run rings around the government and they want that changed.

We really don't know which kinds of companies the government is going to target.

I also think that after the Chinese government reported slower numbers this weekend, the Chinese must do something to be sure their economy doesn't slow too hard. My colleague Larry Williams is questioning how well that economy is doing and it's not that good; he thinks it will get worse before it gets better. He sees a lot of downside to the market, given a correlation he has discovered between U.S. government economic data and the Chinese economy that shows we aren't done with the brutal decline we have seen there.

Me? I am deeply skeptical about the Chinese government and its minions that tell you the crackdown is over. I think this is merely an interlude, some sort of interregnum, to suck U.S. capital back into the country and get people from here to prop up stocks. It's obviously working if money managers are already on air dismissing what the government did as arbitrary, but necessary to "authoritarian capitalism."


That's nonsense. The Chinese want trade as long as we subsidize their activities including the military. They want money from initial public offerings, and they are willing to let us win on a few. Most of all, what they want is to beat us, pretty much in everything and they crackdowns are ways to show who is boss both at home and abroad.

Throughout history we have seen dictatorial regimes take tough actions and then let them subside as more new suckers apologize for them and say it was all one-off. That's where we are. You can play it. You may even make some money.

But, to me, I thought that the regime showed its true colors with the after school crackdown and the Didi fiasco. If you are rich, you are a target and that means they will strip you of your wealth, and if the collateral damages are losses by U.S. investors, so be it. Worthy cause.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action AlertsPLUS, which Cramer co-manages as a charitable trust, has no position in any security mentioned.

TAGS: Earnings | China | Jim Cramer

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:55 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 10 personality traits of successful traders an...
  • 12:08 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    As a Portfolio Name Agrees to a Merger, Here's Our...
  • 10:44 AM EDT PAUL PRICE

    My Very Best Pick for the Next 12 Months

    American Woodmark . It rarely gets better than th...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login